Opinion

Why calling a media agency a ‘consultancy’ won’t fool anyone

With management consultancies increasingly threatening the traditional media agency model, some companies have taken to renaming themselves, but the issue runs much deeper than simply what you call yourself argues Nico Neumann.

Over the past few years, we have read much about management consultancies taking over business from media agencies. Perhaps inspired by this trend, I noticed that several media agencies now refer to themselves as ‘management consultants’ or a ‘marketing consultancy’.

This begs the question: Can a media agent really be a consultant? And what differentiates an agency from a consultancy?

“A rose by any other name would smell as sweet”

Romeo and Juliet – William Shakespeare

While in our modern business world frontiers can become blurry, there are unique characteristics that help determine whether you are dealing with an agency or consultancy.

The basic roles – Agents v Consultants

Agents typically act legally on behalf of clients and receive a commission (e.g. for buying media). However, consultants traditionally are paid a fixed fee and hired to solve a problem. Their solution should be independent of any outcome. Clearly, conflicts of interests arise if someone tries to be both agent and consultant.

Ask yourself: when was the last time you have been recommended by your ‘adviser’ to spend less money on a media channel that was owned or managed by their affiliated group or partners? True consultants will try to save you money, while agents often may want you to spend more on advertising (“Your sales are low, you need to advertise more”). The more you buy through an agency, the more they tend to earn thanks to volume-driven incentives, such as CPMs or other spend percentages.

Client management and mission

Media agencies use account managers who interact regularly with clients’ marketing and media managers. These main sources of contact are often at the mid-tier management level once an agency has been appointed by senior executives. The account managers’ mission is to make these client managers happy no matter what (the answer tends to be ‘yes’ to every request). Eventually, the agency’s goal is to retain an account and the corresponding billings at almost any expense.

Classical management consultancies work differently. They are hired by a top-level executive to iron out a particular issue and may not always be welcomed among more junior managers (“Why were they brought in? Can’t we solve this on our own?”). However, consultants can more easily suggest unpleasant adjustments (cutting costs, laying off staff), because they have the CEO’s back and were hired for a clean-up in the first place.

Work style and culture

Consultants usually have a serious image and presentation style (wearing suits) and focus strongly on performance, often even with payments linked to outcomes. Therefore, it’s critical as a management consultant to work in a highly structured and organised manner.

In contrast, most media agencies still have very little planning and stringent work methods in place.

Let’s be honest: how many Excel templates for media plans have you seen from the same agency? Even asking for consistent naming conventions can pose a struggle to many traditional agency folks.

In a world of Don Drapers, too much structure and seriousness is seen as an obstacle to creativity. ‘Perceived’ value, telling a great story (even if not true) and big ideas have much more weight than being focused on operational efficiency and improvements.

Talent and skills

It’s not a secret that consultancies only hire the very best graduates and also offer higher salaries to attract talent. Consulting firms have a very tough and lengthy recruiting process in which applicants must solve math tests, brain teasers and case studies.

Don’t get me wrong – getting a job at a major agency will not be easy either and can be paid well. Yet, well-known management consultancies just play in a different league when it comes to the skill set they demand for employment and ongoing careers.

Tech and data experience

Agencies and consultancies also vary in their experience with integrating new technology. While some agencies have built up capacities revolving around tech, analytics and data in recent years, many consulting houses have two or three decades of experience in implementing enterprise, analytics and IT solutions.

In addition, the diverse legacy cultures and mindsets help consultancies and agencies cope differently with the new era of tech and data in media. Working in a structured, transparent manner with performance focus matches a data-science paradigm much better than a free-spirit philosophy concentrating on creating ‘magic’ (note that magic is not real and works based on illusion).

Overall, we can see that management consultancies and media agencies, in particular those from big holding groups, have different goals, histories and underlying business models.

Having said this, it will also be interesting to see whether consultancies can venture successfully into the creative space. Will consultancies’ legacy and work style provide an advantage or burden here? And could too many media acquisitions jeopardise the neutrality that consultants enjoy as advisers?

Only time can tell which business models are sustainable in advertising. But at least presently it seems that media agencies are the ones that have to do some hard thinking regarding their future positioning. Just renaming a broken concept and trying to benefit from the popularity of others will not suffice to thrive, or even survive.

Nico Neumann is a senior research analyst at the University of South Australia

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